Burn the speculators.

• Author: Hilleque, Scott
• Position: Letters - Letter to the editor

I laughed out loud while reading Air Transport Association chief economist John Heimlich's letter regarding oil index speculation (Letters, January). His letter shows quite clearly why his industry has been sucking air lately: because it gets economic advice from clueless Keynesians like him.

Of course $60 billion of new speculation money in the futures market will run up prices. Anyone with a high school understanding of supply and demand could tell you that more dollars chasing the same goods will have that effect. At some point, though, those futures contracts come due and the owner has to sell (or, heaven forbid, pay to store the oil somewhere). If real consumer demand wasn't there to begin with, he's going to take a loss. This is exactly what happened. Billions of hedge fund dollars surged from the crumbling stock market into oil futures in the futile pursuit of an investment, any investment, that was showing a profit. Once those contracts started maturing, though, real demand was right where it always was (actually, down a few percent), and red ink flowed like oil from a gusher.

What bristles economists...